Buy shares in a Romanian Company

Buying shares in a Romanian company is achieved through the Shares Assignment Contract concluded between the two parties, namely the actual shareholder who is going to cease the shares in question and the future shareholder who will take over the shares in the Romanian company. The shares assignment can be performed at the shares' nominal value, mentioned in the company’s articles of incorporation, or can be performed at a higher value than the nominal one. In this case the new shareholder has the obligation to discharge to the state the tax in amount of 16%, percentage which applies to the difference between the nominal value and the purchase value. For the shares assignment to be demurral to third parties unknown to the contract, it has to be registered with the Trade Register Office, and consequently published in the Official Gazette. The shares assignment agreement shall contain a clause inserted by which the value of the assignment will be established (they will mention respectively if the assignment remains to the shares nominal value or to another value convened by the parties).

THE SHARES ASSIGNMENT AND THEIR RIGHTS OVER THE DIVIDENDS
The dividends which are incumbent after the share transmission data belongs to the transferee, excepting the case where the parties have otherwise agreed. Although the law refers to Romanian joint stock companies, this also applies Romanian limited liability companies. As a result the shares assignment agreement can contain a clause for the right of the transferee to obtain the dividends for the period prior to the assignment.

If the parties have not regulated the legal situation of the dividends, the practice inclines to assign the them to the assignor for the period of time prior to conclusion of  assignment.

In this way, the right to dividends, being a fundamental social right of each shareholder, cannot be alienated only through the party’s convention. In addition, the dispositions
of article 1 of the Civil Code, stating that the civil

law is not retroactive, is taken into consideration. The company is forced to pay to its shareholders the convened dividends. If this payment obligation is not respected, the company indebts interests to the associates, on the grounds of the article 43 of the Commercial Code.

SHARE ASSIGNMENT TO A FOREIGN LEGAL ENTITY:
The Procedure:

1. Between the Romanian company (as an assignee) and the foreign company (as an assignor) a share assignment agreement will be concluded.

2. All the associates of the Romanian limited liability companies adopt the Decision of the Romanian General Meeting of Shareholders by which the following are approved: a) the shares assignments and b) the modification of the Articles of Association as a result of the assignments.

3. The updated version of the Articles of Association of the Romanian Limited Liability Company (SRL) showing the new shareholding structure and new modifications (if applicable).

4. If the shares cession by the Romanian limited liability company’s shareholders is concluded at a higher value than the nominal value, it interposes the necessity of payment of investments income taxes. This amounts to 16% of the income calculated as the difference between the assignment price and the nominal value of the assigned shares. The investment income tax in this case entails the next problems: a) the investment income tax is withheld (it means that, the assignor will pay to the assignee the assignment reduced price with the investment income tax value); b) the assignor is the one obliged to pay the income in the name of the assignee (even if the assignee is the one who realizes the income); c) in the case of the foreign legal entities without permanent office in Romania (without a fiscal registration number), the foreign legal entity must designate a fiscal representative.

5. The foreign legal entity which becomes shareholder in the Romanian limited liability company will need a series of documents for the assignment registration with the Romanian Trade Register Office.